Scandal and Headlines Could it Happen to Your Facilities - - PowerPoint PPT Presentation

Scandal and Headlines

Could it Happen to Your Facilities Organization?

APPA • Boston • 2010 New Mexico State University

(2)

Presenters

• Angela Throneberry

Associate Vice President of Business, Finance, and Human Resources

• Glen Haubold

Assistant Vice President of Facilities and Services

APPA • Boston • 2010 New Mexico State University

(3)

Learning Outcomes

• What are the warning signs?

– A checklist for your organization

APPA • Boston • 2010 New Mexico State University

(4)

Learning Outcomes

• Impact of financial best practices on

Facilities Management workflows

– Consider impact of controls on service delivery – What level of risk is acceptable?

APPA • Boston • 2010 New Mexico State University

(5)

Learning Outcomes

• Actions to combat that pervasive sense of

entitlement

• Ways to initiate culture change

APPA • Boston • 2010 New Mexico State University

(6)

Personal Note

• You shouldn’t wonder if scandal is possible
• Rather, is the level of risk acceptable?

APPA • Boston • 2010 New Mexico State University

(7)

Learning Outcome #1

• It’s much easier and a lot less painful to

conduct an internal audit than to read about it in the newspapers

APPA • Boston • 2010 New Mexico State University

(8)

NMSU

• New Mexico’s land grant institution
• Comprised of six academic colleges and a

graduate school

• Offers undergraduate, graduate, and

professional degree-granting programs

APPA • Boston • 2010 New Mexico State University

(9)

NMSU Demographics

• 97th out of 657 institutions in terms of

federal research and development

APPA • Boston • 2010 New Mexico State University

(10)

NMSU Demographics

• The Department of Chemistry and

Biochemistry ranked 43rd out of 157 Ph.D.- granting institutions in federal research funding awards

APPA • Boston • 2010 New Mexico State University

(11)

NMSU Demographics

• NMSU FY2010 -

– $612 million operating funds FY 2010 – $84 million capital outlay FY 2010

APPA • Boston • 2010 New Mexico State University

(12)

NMSU Headcount by Campus

Students Faculty Staff Alamogordo 3,474 125 138 Carlsbad 1,998 92 110 Doña Ana 8,796 415 286 Grants 1,385 65 45 Las Cruces 18,497 1,215 3,360

NMSU Unduplicated Student Headcount 29,468

APPA • Boston • 2010 New Mexico State University

(13)

NMSU

• NMSU football team
• Western Athletic Conference (WAC)

– Won 3 Lost 10

APPA • Boston • 2010 New Mexico State University

(14)

NMSU Facilities Demographics

• 288 buildings
• 3,106,670 Institutional & General sq ft
• 5,283,294 sq ft including Auxiliaries
• 1,125 acres
• 425 maintained acres

APPA • Boston • 2010 New Mexico State University

(15)

NMSU Facilities Demographics

• 230 + staff in Operations and Maintenance
• 300 total FTE in Facilities
• $12 million operating
• $5 million recovery / reimbursable
• $5 million deferred maintenance (BRR)

APPA • Boston • 2010 New Mexico State University

(16)

Allegations

• Timekeeping abuse

– Supervisor / employee collusion – Excessive overtime

• Personal use of equipment and materials

APPA • Boston • 2010 New Mexico State University

(17)

Allegations

• Project cost overruns

– Rate issues – Tied in with OT abuse – Excess materials

APPA • Boston • 2010 New Mexico State University

(18)

How was the behavior discovered?

• Whistleblower

– Elevated to the President

APPA • Boston • 2010 New Mexico State University

(19)

Headlines

• Played out in newspaper
• Campus focus

APPA • Boston • 2010 New Mexico State University

(20)

A question:

• Could it happen in my organization?

– Is it happening already?

APPA • Boston • 2010 New Mexico State University

(21)

The question:

• Will I have the information I need to hold

people accountable when I find out?

– And how will I find out?

APPA • Boston • 2010 New Mexico State University

(22)

Areas for improvement

• Management by memo
• Strayed from core mission
• Inadequate reports
• Absence of checks and balances
• “The way we’ve always done it”

APPA • Boston • 2010 New Mexico State University

(23)

Targeted Areas

• Procedures
• Financial controls and reports
• Leadership

APPA • Boston • 2010 New Mexico State University

(24)

Procedures

APPA • Boston • 2010 New Mexico State University

If you think it’s expensive to hire a professional

(25)

Procedures

APPA • Boston • 2010 New Mexico State University

Wait until you hire an amateur

• Red Adair

(26)

Procedures

• Procedures should be clearly stated in

writing, systematically organized, and properly approved

– Or is management by memo used? – Is review process adequate?

APPA • Boston • 2010 New Mexico State University

(27)

Procedures

• Procedures should be systematically

communicated to all officials and appropriate employees of the organization

– Are they accessible? – Do you discuss in staff meetings? – Are they understood?

APPA • Boston • 2010 New Mexico State University

(28)

Procedures

• Procedures should be coordinated so that
• ne employee’s work is automatically

checked by another who is independently performing separate prescribed duties

– Call out verification by plant – Business office overtime checks – Utilize central support services

APPA • Boston • 2010 New Mexico State University

(29)

Procedure Checklist

• Procurement of supplies through the

warehouse and the procurement system?

• Regular inventories of small tools and shop

stock?

• Procurement card, fuel card, and petty cash

purchases?

• Is physical security of assets adequate?

APPA • Boston • 2010 New Mexico State University

(30)

Procedure Checklist

• Intra- and inter-departmental use of

equipment?

• Job estimation and planning?
• Operation of the Work Order System

including defined administrative and security roles? A written procedure for adjustments?

APPA • Boston • 2010 New Mexico State University

(31)

Procedure Checklist

• Employee and supervisor review of

timesheets?

• The use of cell phones and the operation of

vehicles?

• Conflict of interest and outside

employment?

APPA • Boston • 2010 New Mexico State University

(32)

Questions to Ask

• Are frequent, documented, training and

review sessions conducted?

APPA • Boston • 2010 New Mexico State University

(33)

Questions to Ask

• Are management and supervisor reports

appropriately distributed and employees properly trained on how to use the information?

APPA • Boston • 2010 New Mexico State University

(34)

Questions to Ask

• Is everyone clear about timekeeping and

how travel time, training, and “shop time” are calculated on work orders and billed?

APPA • Boston • 2010 New Mexico State University

(35)

Questions to Ask

• Is our organization consistent with how

projects funded through state appropriations and with research grants are billed for work?

APPA • Boston • 2010 New Mexico State University

(36)

Questions to Ask

• Do our staff and customers understand

what constitutes billable and non-billable work? Do we have a published schedule of services and rates?

APPA • Boston • 2010 New Mexico State University

(37)

Questions to Ask

• Are markups and shop labor rates

developed in accordance with Office of Management and Budget A21 Guidelines and periodically reviewed by the appropriate central administrative unit?

APPA • Boston • 2010 New Mexico State University

(38)

Questions to Ask

• Do we have clear procedures about

callouts, scheduled overtime, and overtime approvals? Is there a method in place to conduct spot checks of hours worked?

APPA • Boston • 2010 New Mexico State University

(39)

Questions to Ask

• Are there guidelines in place regarding

vendor relations?

APPA • Boston • 2010 New Mexico State University

(40)

Questions to Ask

• Do we have an established process to

encourage confidential reporting? Is it publicized?

APPA • Boston • 2010 New Mexico State University

(41)

Financial Controls and Reports

APPA • Boston • 2010 New Mexico State University

(42)

Accounting Controls & Management Reporting

• Risk management and risk assessment

processes help focus efforts and prioritize

– High level financial overview to identify target areas – Weaknesses and deficiencies are often consistent in other areas

APPA • Boston • 2010 New Mexico State University

(43)

Accounting Controls & Management Reporting

• Control Environment - The overall control

tone of the organization

– What is management’s operating philosophy and is it practiced?

APPA • Boston • 2010 New Mexico State University

(44)

Accounting Controls & Management Reporting

• Risk Assessment - The process used to

identify, measure, evaluate, and prioritize risks that may affect an organization’s ability to achieve established objectives.

– Have agreed upon goals and objectives been established?

APPA • Boston • 2010 New Mexico State University

(45)

Accounting Controls & Management Reporting

• Control Activities - The policies and

procedures established to assist in accomplishing objectives

– Is the acceptable level of risk identified? – Are the checks and balances sufficient?

APPA • Boston • 2010 New Mexico State University

(46)

Accounting Controls & Management Reporting

• Information & Communication - Provides

for the identification, establishment and delivery of information and data to assist in accomplishing objectives

– Do employees have all the information they need to do their jobs?

APPA • Boston • 2010 New Mexico State University

(47)

Accounting Controls & Management Reporting

• Monitoring - The process of assessing the

quality and effectiveness of the established internal controls.

– Are the established controls working as intended?

APPA • Boston • 2010 New Mexico State University

(48)

Accounting Controls & Reporting

• Visible support and changes
• Established a foundation
• Demonstrated commitment to

accountability and ethics

• Opened facilities “operational doors”
• Set the “tone at the top”

APPA • Boston • 2010 New Mexico State University

(49)

Leadership & Culture Change

APPA • Boston • 2010 New Mexico State University

(50)

Organizational Culture

• How the organization functions
• How things get done
• Must understand it first

APPA • Boston • 2010 New Mexico State University

(51)

Culture Change & Entitlement

APPA • Boston • 2010 New Mexico State University

(52)

Culture Change

• Starts at the top
• Need to know where you’re going
• Review organizational structure
• Selection and evaluations
• Mission and value statements

APPA • Boston • 2010 New Mexico State University

(53)

Culture Change

• Be patient
• Remember the ‘tipping point’

– the levels at which the momentum for change becomes unstoppable (Bryan Walsh) – Term first coined by Morton Grodzins

• Communications and Communications

APPA • Boston • 2010 New Mexico State University

(54)

Sense of Entitlement

• It starts with you!
• Develop accurate perceptions of

management goals and behaviors

• Facilities is in a position to be a campus

leader

APPA • Boston • 2010 New Mexico State University

(55)

Accountability

• Procedures
• Financial controls and reports
• Leadership

= ACCOUNTABILITY

APPA • Boston • 2010 New Mexico State University

(56)

Accountability

APPA • Boston • 2010 New Mexico State University

(57)

Questions?

APPA • Boston • 2010 New Mexico State University

(58)

Leadership

• #1 value in study after study -

TRUST OUR LEADERS TO DO THE RIGHT THING

APPA • Boston • 2010 New Mexico State University

(59)

Thank You!

Angela Throneberry

athroneb@nmsu.edu

Glen Haubold

ghaubold@nmsu.edu

APPA • Boston • 2010 New Mexico State University

The Accountant and the Engineer

Angela Throneberry Glen Haubold

Presenters

• Angela Throneberry

Associate Vice President of Business, Finance, and Human Resources

• Glen Haubold

Assistant Vice President of Facilities and Services

(2)

Learning Outcomes

• Use metrics and comparative data to

measure organizational performance and identify areas for improvement

(3)

Learning Outcomes

• Discuss approaches to initiating culture

change

(4)

Learning Outcomes

• Ideas and actions to combat that pervasive

sense of entitlement that leads to the rationalization for theft and fraud

• Questions to ask of your Facilities
• rganization

(5)

Personal Note

• You shouldn’t wonder if scandal is possible
• Rather, is the level of risk acceptable?

(6)

What the engineers think

(7)

What the accountants think

(8)

Learning Outcome #1

• It’s much easier and a lot less painful to

conduct an internal audit than to read about it in the newspapers

• Must work together to accomplish this goal

(9)

NMSU

• New Mexico’s land grant institution
• Groundbreaking research in biosciences,

natural resources, aerospace, information sciences and U.S.-Mexico border development

(10)

NMSU Demographics

• 97th out of 657 institutions in terms of

federal research and development

(11)

NMSU Demographics

• NMSU FY2010 -
• $612 million operating funds FY 2010
• $84 million capital outlay FY 2010

(12)

Headcount by Campus

Students Faculty Staff Alamogordo 3,474 125 138 Carlsbad 1,998 92 110 Doña Ana 8,796 415 286 Grants 1,385 65 45 Las Cruces 18,497 1,215 3,360

NMSU Unduplicated Student Headcount 29,468

(13)

NMSU

• NMSU football team
• Western Athletic Conference (WAC)
• Won 3 Lost 10

(14)

Facilities Demographics

• 288 buildings
• 3,106,670 Institutional & General sq ft
• 5,283,294 sq ft including Auxiliaries
• 1,125 acres
• 425 maintained acres

(15)

Facilities Demographics

• 230 + staff in Operations and Maintenance
• 300 total FTE in Facilities
• $12 million operating
• $5 million recovery / reimbursable
• $5 million deferred maintenance (BRR)

(16)

Allegations

• Timekeeping abuse
• Supervisor / employee collusion
• Excessive overtime
• Personal use of equipment and materials

(17)

Allegations

• Project cost overruns
• Rate issues
• Tied in with OT abuse
• Excess materials

(18)

How was the behavior discovered?

• Whistleblower
• Elevated to the President

(19)

Headlines

• Played out in newspaper
• Campus focus

(20)

A question:

• Could it happen in my organization?
• Is it happening already?

(21)

The question:

• Will I have the information I need to hold

people accountable when I find out?

• And how will I find out?

(22)

Areas for improvement

• Management by memo
• Strayed from core mission
• Inadequate reports
• Absence of checks and balances
• “The way we’ve always done it”

(23)

Targeted Areas

• Procedures
• Financial controls and reports
• Leadership

(24)

Procedures

If you think it’s expensive to hire a professional

(25)

Procedures

Wait until you hire an amateur

• Red Adair

(26)

Procedures

• Procedures should be clearly stated in

writing, systematically organized, and properly approved

• Or is management by memo used?
• Is review process adequate?
• Are they adequately maintained and updated?

(27)

Procedures

• Procedures should be systematically

communicated to all officials and appropriate employees of the

• rganization
• Are they accessible?
• Do you discuss in staff meetings?
• Are they understood?

(28)

Procedures

• Procedures must incorporate Internal

Controls

• Coordinate so one employee’s work is

checked by another performing separate prescribed duties

• Call out verification by plant
• Business office overtime checks
• Utilize central support services

(29)

Procedure Checklist

• Procurement of supplies through the

warehouse and the procurement system?

• Regular inventories of small tools and

shop stock?

• Procurement card, fuel card, and petty

cash purchases?

• Is physical security of assets adequate?

(30)

Procedure Checklist

• Intra- and inter-departmental use of

equipment?

• Job estimation and planning?
• Operation of the Work Order System

including defined administrative and security roles? A written procedure for adjustments?

(31)

Procedure Checklist

• Employee and supervisor review of

timesheets?

• The use of cell phones and the operation of

vehicles?

• Conflict of interest and outside

employment?

(32)

Questions to Ask

• Are frequent, documented, training and

review sessions conducted?

(33)

Questions to Ask

• Are management and supervisor reports

appropriately distributed and employees properly trained on how to use the information?

(34)

Questions to Ask

• Is everyone clear about timekeeping and

how travel time, training, and “shop time” are calculated on work orders and billed?

(35)

Questions to Ask

• Is our organization consistent with how

projects funded through state appropriations and with research grants are billed for work?

• How do you verify?

(36)

Questions to Ask

• Do our staff and customers understand

what constitutes billable and non-billable work? Do we have a published schedule of services and rates?

(37)

Questions to Ask

• Are markups and shop labor rates

developed in accordance with Office of Management and Budget A21 Guidelines and periodically reviewed by the appropriate central administrative unit?

(38)

Questions to Ask

• Do we have clear procedures about callouts,

scheduled overtime, and overtime approvals? Is there a method in place to conduct spot checks of hours worked?

(39)

Questions to Ask

• Are there guidelines in place regarding

vendor relations?

(40)

Questions to Ask

• Do we have an established process to

encourage confidential reporting? Is it publicized?

(41)

Financial Controls and Reports

(42)

Accounting Controls & Management Reporting

• Risk management and risk assessment

processes help focus efforts and prioritize

• High level financial overview to identify target areas
• Weaknesses and deficiencies are often consistent in
• ther areas

(43)

Accounting Controls & Management Reporting

• Control Environment - The overall control

tone of the organization

• What is management’s operating philosophy and is it

practiced?

(44)

Accounting Controls & Management Reporting

• Risk Assessment - The process used to

identify, measure, evaluate, and prioritize risks that may affect an organization’s ability to achieve established objectives.

• Have agreed upon goals and objectives been

established?

(45)

Accounting Controls & Management Reporting

• Control Activities - The policies and

procedures established to assist in accomplishing objectives

• Is the acceptable level of risk identified?
• Are the checks and balances sufficient?

(46)

Accounting Controls & Management Reporting

• Information & Communication - Provides for

the identification, establishment and delivery of information and data to assist in accomplishing objectives

• Do employees have all the information they need to

do their jobs?

(47)

Accounting Controls & Management Reporting

• Monitoring - The process of assessing the

quality and effectiveness of the established internal controls.

• Are the established controls working as intended?

(48)

Metrics

(49)

Metrics / Facilities

• Administrative
• Construction
• Custodial
• Energy
• Grounds
• Maintenance

(50)

Metrics / Facilities

• FTE and Expense
• Per Student FTE
• Per GSF
• Percentage of I&G

(51)

Comparisons / Reports

• Internal Comparisons
• Budget To Actuals
• Billable vs. Non-Billable Work/Hours
• OT Hours
• Rates

(52)

Comparisons / Reports

• External Comparisons & Best Practices
• APPA – Facilities Performance Indicator Study
• Custodial Services
• Grounds
• Warehouse Operations
• Facilities – Capital Investment and Operations

(53)

Accounting Controls & Reporting

• Visible support and changes
• Established a foundation
• Demonstrated commitment to

accountability and ethics

• Opened facilities “operational doors”
• Set the “tone at the top”

(54)

Leadership & Culture Change

(55)

Organizational Culture

• How the organization functions
• How things get done
• Must understand it first

(56)

Culture Change & Entitlement

(57)

Culture Change

• Starts at the top
• Need to know where you’re going
• Review organizational structure
• Selection and evaluations
• Mission and value statements

(58)

Culture Change

• Be patient
• Remember the ‘tipping point’
• the levels at which the momentum for change

becomes unstoppable (Bryan Walsh)

• Term first coined by Morton Grodzins
• Communications and Communications

(59)

Sense of Entitlement

• It starts with you!
• Develop accurate perceptions of

management goals and behaviors

• Facilities is in a position to be a campus

leader

(60)

Accountability

• Procedures
• Financial controls and reports
• Leadership

= ACCOUNTABILITY

(61)

Accountability

(62)

Teamwork

• No one can whistle a symphony. It takes

an orchestra to play it.

• H.E. Luccock

(63)

Questions?

(64)

Leadership

• #1 value in study after study -

TRUST OUR LEADERS TO DO THE RIGHT THING

(65)

Thank You!

Angela Throneberry

athroneb@nmsu.edu

Glen Haubold

ghaubold@nmsu.edu

(66)